ARX Aerobox

RNS Number:0319H
AeroBox plc
01 August 2006



AeroBox PLC ("ARX" or the "Company")



Trading Statement



The Company today provides a trading update on group prospects following a
sequence of significant events that have occurred within the Company's main
operating subsidiary, AeroBox Composite Structures ("ACS").



In response to a quickly developing order book ACS increased its manpower levels
to produce a forecast 800 unit load devices ("ULD") per month from May 2006. At
the same time the Board appointed a new operations manager of ACS to manage the
expanding production requirement at ACS.  Towards the end of June the Board was
informed that certain key manufacturing processes were unable to sustain volumes
at the required rate. A key issue revolved around the special panel forming
process and, in particular, the edge forming machines specified and installed by
previous management of ACS.  The higher output requirement has exposed that the
machinery is unreliable, causing excess scrap and subsequent FAA inspection
difficulties, thus creating serious production bottlenecks.



Although output in June was 345 ULDs (significantly above the highest recorded
previous monthly level of 167) the actual volume was below that included in
forecasts submitted to Laurus Master Fund ("LMF") as part of the $3,000,000
revolving debt facility (announced on 2nd May 2006).  The low output was
affecting delivery schedules to customers and the cash requirement at ACS.
Consequently the Board met with LMF to discuss the ongoing funding of ACS during
which LMF advised they wished to consider their position in light of lower than
forecast production output.



An agreement was reached on 27th July for LMF to provide sufficient working
capital for ACS to complete orders currently in progress which are expected to
be completed by mid-September, but ACS currently has no indication whether the
previously agreed long term debt facility will continue to be available.



The short-term plan agreed with LMF included a significant reduction in staff
and on 28th July 33 ACS employees were made redundant.  ACS is also currently in
discussion with its creditors over a compromise agreement to reduce its
exposure.



At Universal Core ("UC"), trading is at levels consistent with 2005 and has been
receiving honeycomb core from ACS which, as a consequence of the LMF action, can
no longer be financed.  In its current constrained state UC cannot meet its
customers' needs and UC will not be able to achieve the sales target of
$2,500,000 in 2006.



The ULD operation currently has over $10,000,000 of unfulfilled orders for
delivery over the next three years and the Board continues to believe that with
a cost effective manufacturing facility it has a viable future. Consequently,
the Board has decided to seek a strategic manufacturing partner for the ULD
operation and this process has commenced and a number of possible partners have
been identified.



The Board is urgently reviewing all other options available to it, including a
disposal of ACS, and will advise shareholders of further developments as soon as
it is able to do so.





Enquiries:



Ray Gibbs                Group Managing Director, AeroBox plc   +44 207 929 5599

Trevor Phillips          Holborn                                +44 207 929 5599

Jeremy Porter            Seymour Pierce                         +44 207 107 8000




                      This information is provided by RNS
            The company news service from the London Stock Exchange
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